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Thursday, July 25, 2024

Cassava exporters seek PM’s urgent help over fear of bankruptcy

The Saigon Times

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HCMC – The Vietnam Cassava Association is seeking urgent help from the prime minister as multiple businesses in the field are on the verge of bankruptcy due to value-added tax (VAT) refund issues.

In a letter sent to the Government leader, the association said that cassava is the third most important food crop in Vietnam and is linked to 1.2 million laborers. In recent years, the country’s cassava export value reached US$1.35 billion per year, ranking second in the world, just after Thailand.

However, the local cassava sector is facing major obstacles and teetering on the brink of collapse as the General Department of Taxation issued a dispatch on March 7 on a refund of VAT on cassava starch.

The Chinese taxation authority provided its Vietnamese counterpart with the verification results of the business partners of Vietnamese cassava exporters. According to the results, many Chinese companies are inoperational and did not import cassava products from Vietnam.

Therefore, Vietnam’s General Department of Taxation ordered its subordinates nationwide to suspend VAT refunds and collect tax arrears of local cassava exporters.

Meanwhile, the Vietnam Cassava Association said the verification of foreign buyers had shown many inadequacies. The prevailing Vietnamese regulations on VAT refund do not stipulate that the dossiers for VAT refund need to be verified by foreign buyers to be eligible for VAT refunds. Also, local cassava exporters neither have to nor have the capability to verify their foreign partners when signing contracts.

The association said the volume of exported cassava could be worked out as local exporters have to make customs declarations to Vietnamese customs agencies when transporting cassava to the border gates. Revenues earned from cassava exports were transferred through bank accounts and demonstrated on bank transaction records. Therefore, taxation agencies can completely control the volume of exported cassava.

Due to the impact of the pandemic over the past two years, the local cassava sector has been facing many obstacles, including large inventories. Lots of cassava businesses were forced to suspend their operations as they could not afford to purchase input materials from cassava farmers.

Further, local cassava exporters are fiercely competing with rivals in Thailand and Indonesia, leading to overlapping difficulties. Therefore, the suspension of VAT refunds and collection of tax arrears could put local exporters on the verge of bankruptcy, the association said.

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